Not so fast! AI will save us from stupid trades

Which stock did you lose the most on? If you’re like most investors, you’ve made a few losing trades that still keep you up at night. What if you had a financial analyst at your side, watching your every trade? Advances in AI will make this a reality with the personal trading assistant.

Apple’s Siri taught us that the “intelligent assistant” is a promising use case for AI: a bot that helps you perform everyday tasks and chores. Siri’s a bit of a generalist, but these bots are scaling into more specific verticals and will soon become experts at more specific tasks. For retail investors, AI will enable an intelligent assistant that stops you before a bad trade.

We all know the feeling.

As any investor knows, continued success requires that you stick to a strategy. You make your biggest mistakes when your emotions run high and you stray from your usual strategy. You might get greedy and miss the opportunity to sell at a profit. Or you might panic during a downturn and sell before the next day’s recovery. Instead of trading on company fundamentals, you traded on a whim, and paid dearly for it.

Your AI-powered trading assistant will make these snap judgments a thing of the past. Most of the time, it sits around quietly, letting you do your thing. It’s not showing any signs of life, but the machine learning algorithms in its “brain” are analyzing the data behind your trades to figure out the ins and outs of your personal trading strategy.

Then one day, you hear about a new biotech company that’s heating up fast, and word is spreading on Wall Street. Heart pounding, you look it up, glance at the fundamentals, and fill out an order to buy 1,000 shares. Before you confirm the trade, your trading assistant stops you with a popup: this trade is abnormal for you. Usually, you invest in biotech companies in the late stages of FDA approval; this company is years away from that. Are you sure this is a good trade

Most of us see ourselves as rational human beings, and 99% of the time, we are. Unfortunately for investors, acting irrationally 1% of the time is expensive. Those 1% bad trades can cause the majority of the losses in our portfolios. We need someone with no emotions to alert us before we break the rules of our own investing strategy. Luckily, advanced AI will bring us just that: no more stupid trades.